In the last quarter Nokia, Oyj. (HEL:NOK1V) lost its spot as the world's largest phonemaker as Samsung Electronics Comp., Ltd. (SEO 005930) and Apple, Inc. (AAPL) blew by it. Still, for all the gloom-and-doom surrounding the Finnish firm, its defunct Symbian smartphone operating system, and its slow transition to Windows Phone 7, things may not be quite as bad as some had thought.

I. Earnings Aren't Great, But Are Less Bad Than Expected

Yesterday evening Nokia reported earnings of €9B ($12.35B USD). That represents a 13 percent year-to-year drop in sales and a 3 percent drop in sales from the Q2 2011. The company posted a €68M ($93.34M USD) net loss, much worse than the €403M ($553.20M USD) profit the company turned last year, but slightly better than the €487M ($668.50M USD) net loss that the company reported last quarter (International Financial Reporting Standards-style earnings).

The lower loss sent shares soaring 8 percent in pre-market trading.

Such a move may seem baffling to non-investors, particularly in light of Apple's stock taking a hit on large, but less than expected growth. But it's important to remember that expectations of growth and revenue are baked into stock prices. A company that's expected to decline sharply is priced low (like Nokia), while a company that's expected to sustain growth (like Apple) is priced high. Any surprises in either direction can send the stock up or down.

Nokia still has €5.07B in cash ($6.95B USD) on hand, so it should be able to sustain its push to Windows Phone 7.

It's not rocket science what Nokia needs to get back on the right track. It needs to:

Get product on the market

Release attractive handsets

Shots of the Nokia 800 -- part of Nokia's upcoming Windows Phone Mango lineup -- leaked on PocketNow yesterday, in lieu of next week's official launch.

The Nokia 800 is arguably the best looking Windows Phone on the block. [Source: PocketNow]

The phone looks very good -- in an iPod Nano-ish sort of way, at least. It comes in three colors. While it may have a relatively small screen -- 3.7-inches -- this may be one of the more stylish smaller smartphone on the market this side of the iPhone.

The Nokia 800 is rumored to be launch November 15th, alongside two other Windows Phone Mango models from Nokia. Hopefully that means "launching November 15th in the U.S." as Nokia has been a bit squirrelly about how much hardware it will put out in the U.S. this year.

At the very least the Nokia 800 seems to be a big step in the right direction in design appeal.

I don't use the expensive smartphones to access the even more expensive mobile internet. When I'm on the road, I use my laptop with free Wi-Fi for that. In fact, I'm using it right now.

For calls, I prefer the small inexpensive flip-phones. Nokia does make good flip-phones hardware-wise. However, their menu system is subpar. For example, there is no way to prevent the screen from shutting down while you're using the phone which is ridiculous!

Nokia needs to improve the software on their flip-phones. Essentially, what we need is a flip-phone with Nokia hardware and Samsung software. Not everyone wants to pay mega-bucks to use a phone.